MTD deferred Group VAT registration (deferred to Oct 2020)

Making Tax Digital deferred start date for more complex businesses

As a follow on to single registration businesses, HMRC is preparing to facilitate Group VAT registrations to be filed by MTD also. This is naturally more complex and very few accounting software providers have the ability to deliver this digitally, unlike AccountsIQ.

making-tax-digitalMaking Tax Digital (MTD) is a HMRC initiative that has been in place since April 2019 whereby the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software.  Read our guide on how to submit VAT returns digitally for more information.

HMRC delayed the mandated start until 1 October 2019 for some businesses with more complex requirements (such as those who are required to submit a group VAT registration).  There are approximately 40,000 businesses that fall into one of the relevant categories making them eligible for deferral.

Who are the deferred businesses?

In addition to group VAT registrations, there are other businesses have also been given this deferred date. The types of businesses that have a deferred MTD for VAT start date of October 2019 include:

Businesses that fit within the above criteria will each have received a letter from HMRC outlining that as a deferred business they are mandated to comply with MTD from October 2019 instead of April 2019.

HMRC list of compatible software suppliers

These deferred businesses still need to acquire a suitable commercial software product or appoint an agent to submit returns to HMRC on their behalf. AccountsIQ is listed on the HMRC website as an MTD-compliant vendor.

What does the October 2019 deadline mean?

Group VAT Registration

If we take VAT groups as an example, companies needing to submit group VAT returns from October 2019 will need to submit returns digitally via the MTD VAT portal – this is for VAT periods starting October 1st, so the first group MTD VAT return will actually be filed for the quarter ending December 2019 in January 2020.

Many companies need to produce and register a group VAT return. Today, that group VAT calculation can be done on a spreadsheet (copy and paste the individual VAT figures from the different bookkeeping systems, add them up) and the resulting figures manually entered into HMRC’s portal.

From October 2019 that spreadsheet will need to be API enabled – otherwise known as bridging software, which is effectively a spreadsheet with a link to HMRC. Group returns until April can be prepared in Excel and use a bridging tool to submit the 9 figures – this is the quickest fix for groups, but is not a long term solution.  There is a soft landing period for one year from the deferred start date for group VAT registration companies so from October 2020 there will need to be a digital link between the individual databases of the group and the medium used to calculate the VAT owed.

Digital Links and VAT submission

From October 2020 records that are maintained in more than one programme or product must have a digital link between each of the software products and their spreadsheets. Information cannot be transferred manually (so no more copy and paste, adding figures together and then submitting).

How AccountsIQ will make it easier to submit Group VAT returns digitally

The AccountsIQ platform is used by thousands of companies who already submit their MTD VAT return digitally to HMRC. From March 2020 additional functionality will be in place which will allow a consolidated group VAT return to be submitted digitally to HMRC under MTD.

AccountsIQ’s solution will be a best practice solution for group companies needing to submit a group VAT return, as using the AccountsIQ platform the process will be efficient, reduce inaccuracies and the underlying architecture will provide the ability to produce a ‘detailed VAT return’ report. Essentially this is what HMRC ask for ahead of an enquiry, something that is not so easily achieved using multiple spreadsheets, digital links and APIs.

Group VAT Webinar

AccountsIQ is running a webinar in which you’ll be able to find out how our software provides best of breed Group VAT compliance for MTD:

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To find out how we can help you with Making Tax Digital, get in touch or request a demo to see for yourself how AccountsIQ’s powerful cloud accounting software could transform your business. Sign up to our Newsletter to make sure you receive future MTD updates and other accounting news.